This Friday sees the release of the US unemployment rate for September, together with the non-farm payrolls number for the same month. So what?

The “so what” is very relevant as American jobs are the key to Bernanke’s QE3 infinity scheme, the trend going forward of the major US stock Indices and the likely outcome of the 6th November Presidential Election race.

The Federal Reserve Chair has hitched his wagon to the unemployment number, in respect of buying $US40BN of mortgages every month until the US unemployment rate has fallen to an acceptable level, rumoured to be under the 7% mark. Should this take longer than anticipated, the Fed balance sheet will become even more impaired than it currently is. It’s currently at 8.1%.

The S & P 500 stock Index shows a close correlation to the non-farm payroll as can be seen below.

The non-farm payroll number for August saw a miserly 96000 jobs created against the 130,000 expected, with the July number revised down to 141K from the original 163K figure. Temporary jobs, the best indicator of employers’ intentions, fell by 15,000, as did factory jobs, by the most in 2 years.

The consensus survey for Friday’s number, according to a Bloomberg survey, is for a 115,000 number, so we will be interested to see just how accurate this reading is and to how the correlation holds up.

Finally, although the October unemployment rate is due to be announced on the 2nd November, just 4 days before Election Day, it will be the September number released this week which allows for reflection, comment and assessment.